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How Will We Know if Obamacare Succeeds or Fails?


The news about Obamacare right now is tightly focused on the messy implementation that has gone about as bad as the ACA’s critics could wish. But assuming the administration fixes these glitches, and we move on to the next phase of Obamacare, measuring whether the law is actually succeeding or not will be tricky business.

Two recent pieces propose different metrics for judging whether the ACA is succeeding in making our health system better and more affordable. At Bloomberg, John Tozzi proposes a four-fold scheme: one month out, the ACA should be judged on how difficult it still is to sign up; six months out, by how many people have actually signed up; one year, by how much those who got insurance from the ACA are paying; and long term, by whether health care spending is slowing down overall. His explanation of this last metric is particularly on point:

Eighteen cents of every dollar spent in America goes to health care, more than in other rich nations, and Americans aren’t any healthier for it. Obamacare has dozens of mechanisms aimed at improving people’s health while slowing the growth of medical spending. They include subsidies to help people buy insurance, penalties if they don’t, and payments that reward doctors and hospitals for better results, not more procedures. We don’t know how they’ll all work together. The growth of health-care spending has moderated since 2009, though the weak U.S. economy accounts for much of the slowdown. For the health reform experiment to work, Americans need to get more for those 18¢.

Meanwhile, at Quartz, Miles Kimball has a post entitled “Don’t Believe Anyone Who Claims to Understand the Economics of Obamacare.” The whole post is worth reading, but near the end, he argues that the ACA’s effect on innovation could eventually be the most important thing about it’s long-term legacy:

Still, the key wild card in judging Obamacare will be its effect on health care innovation. Subsidies may get people more care now, but crowd out government funding for basic medical research. Efforts to standardize medical care could easily yield big gains at the start as hospitals come up to best practice, yet that standardization could make innovation harder later on. An emphasis on cost-containment could encourage cost-reducing innovations, but discourage the development of new treatments that are very expensive at first, but could become cheaper later on. And Obamacare will tend to substitute the judgments of other types of health care experts in place of the judgments of business people, with unknown effects. Whatever the effects of Obamacare on innovation, we can be confident that over time these effects on innovation will dwarf most of the other effects of Obamacare in importance.

From our perspective, these are both very good places to start thinking about how to measure Obamacare’s impact. Of course, Tozzi’s metric is easier to quantify than Kimball’s: it will be difficult to judge how the ACA is or isn’t limiting innovation. But that doesn’t mean we shouldn’t try: without innovation, there’s no hope for a sustainable solution to the ongoing crisis of exploding health care costs.

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  • Andrew Allison

    Unnecessary procedures are a very large part of the problem. The fall into two categories, CYA in the part of practitioners in the form of unnecessary testing, and sheer fraud. Might a solution to the former be (shudder) single-payer malpractice insurance, which could level the playing field between practitioners and the Tort Bar. Another deterrent might be to make assess damages for failed claims.

    As to the rest, independent peer-review of non-emergency cases might help. IT should make it possible to identify hospitals and/or practitioners with suspiciously high rates of the commonly abused procedures. When identified, significant monetary damages seem appropriate.

  • Boritz

    *** without innovation there’s no hope for a sustainable solution to the ongoing crisis of exploding health care costs.***

    You will see lots of innovation from now on. Loosely defined.

  • ljgude

    Oh it’s 18 cents now? That sounds illegal because the ACA limits healthcare costs to 17.5% of GDP by 2017. I’m just sitting here laughing my bazooka off watching the world’s most expensive healthcare system systematically snooker itself. Enjoy the show folks.

  • stan

    how to measure Obamacare’s impact? The millions of jobless.

  • f1b0nacc1

    No matter what happens, the administration will declare that it is a smashing success, and their syncophants in the media will sagely agree.

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